Forfeited funds to benefit 'net losers' with Zeek

Monday

Dec 23, 2013 at 4:08 PM

The potentially millions of dollars to be forfeited by two top Zeek Rewards conspirators will eventually benefit those who lost money through the alleged Ponzi scheme, a U.S. Attorney's Office officer confirmed Monday.

BY NASH DUNNThe Dispatch

The potentially millions of dollars to be forfeited by two top Zeek Rewards conspirators will eventually benefit those who lost money through the alleged Ponzi scheme, a U.S. Attorney's Office officer confirmed Monday.Former chief operating officer Dawn Wright-Olivares and master programmer Daniel Olivares, her stepson, will plead guilty or settle to criminal and civil charges for their roles in perpetuating the Lexington-based operation. As part of proposed settlements to the civil charges, filed Friday in U.S. District Court in Charlotte, the Olivareses agreed to forfeit a total of more than $11.4 million. The payments will be made as part of the criminal cases, which will likely impose more financial penalties as well as possible prison sentences.Lia Bantavani, a U.S. Attorney's Office public affairs officer, said any funds collected from the Olivareses will ultimately be paid to those who lost money.A federal judge agreed to appoint receiver Ken Bell as a special master in the criminal cases, whose duties would include recommending which Zeek Rewards users are owed money and how much they are owed.Bell, an attorney with McGuireWoods in Charlotte, was appointed receiver last August after the U.S. Securities and Exchange Commission shut down Zeek Rewards and parent company Rex Venture Group. Bell's team of attorneys, forensic database experts and law enforcement officials have collected more than $320 million for what will likely be more than 100,000 valid claimants, including some in Davidson County and thousands in North Carolina."The pleas and civil charges do not impact my duties, except to make it easier to recover funds from Wright-Olivares, Olivares and the other former insiders and 'net winners,'" Bell said in an email Monday.In an effort to recover more funds, the receivership is preparing to sue insiders, including the Olivareses, as well as dozens of the largest profiteers who made money through the program. It's estimated that more than $290 million was "fraudulently transferred" to Zeek Rewards' "net winners," Bell said.Wright-Olivares, 45, of Clarksville, Ark., is expected to plead guilty to investment fraud conspiracy and tax fraud conspiracy while Olivares, 31, also of Clarksville, will plead guilty to investment fraud conspiracy, according to plea agreements signed earlier this year. Each charge carries a maximum prison term of five years and a $250,000 fine.Former chief executive officer and Davidson County resident Paul Burks will likely be asked to give up money he made from the company. Burks, who has not been charged criminally, settled with the SEC's original charges last year for $4 million.Burks was referenced in court documents filed with the Olivareses cases last week, which labeled company owner "P.B." as a co-conspirator who diverted $10.1 million to personally enrich himself.Authorities believe Zeek Rewards raised close to $850 million from nearly 1 million users throughout the world. Through the program, which was marketed as an advertising division of Zeekler.com, company officials allegedly used newer-investor payments to finance older-investor payouts, what SEC officials called a "classic" Ponzi scheme.While it's estimated that about 840,000 users lost money, the amount of actual people is expected to be much less, as some investors used multiple user accounts. About 170,000 total claims were submitted through an online portal this year, making up a gross total of about $600 million.For more information, go to www.zeekrewardsreceivership.com.Nash Dunn can be reached at 249-3981, ext. 227, or at nash.dunn@the-dispatch.com. Follow Nash on Twitter: @LexDispatchNash

Never miss a story

Choose the plan that's right for you.
Digital access or digital and print delivery.